Generic change management - ppt

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This presentation will give you an opportunity to evaluate a failed organizational change, identify a theory that could have been used to develop the change, and apply that theory to the failed change. The presentation must follow these standards:

  • be 20 powerpoint slides
  • have at least three outside professional resources
  • follow APA Reference Page and documentation throughout the presentation

A PowerPoint of the presentation is attached as well as the PowerPoint and the documents discussing organizational change.

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Organizational Change Management Dr. Charles Poplos, PMP Organizational Change Management • Organized, systematic application of – Knowledge – Tools – Resources of change • To provide organizations with a key process to achieve their business strategy Difference Between Project and Change Management • Project Management focus is on specific project activities and deliverables • Change Management focus is on the impact the project will have on the organization Thus • Project Management – the change • Change Management – getting the change accepted Essential Components • • • • • • • Sponsor Management End-user Communication Readiness Training Coaching Transition Planning Resistance Management Sponsor Management • Sponsor is key • CM team works to produce the Sponsor Roadmap – Let the sponsor know about expectations, and – How the sponsor can help achieve success End-user Communication • Permeate the gaining organization’s hierarchy with change information – Keep them informed – Get them ready for the impact – Make them comfortable Readiness • Readiness involves • Analyzing an organization to identify – The current state – The future desired state, – What is required to move from one state to the other • Organizations need to understand – The specific impacts the new system will have on their own internal operations – To prepare proactively for those impacts Training • Training plays a critical role in helping the gaining organization adapt the new processes, hardware, software, etc. into their operations • CM Team performs training needs analysis – Determines the training strategy – Helps manage the training plan – Identifies the skill gaps of the affected end-user community Coaching • The CM team works with supervisors to ensure they are aware of the – Project or what is being changed – Impacts – Expectations of them • The coaching effort can range from – Coaching info sheets to – Formal meetings with managers/supervisors to advise them on how best to coach their staff Transition Planning • Transition Planning involves – Preparing the organization to support the new system once the change is completed – The team • Reviews the skills necessary to support the new system • Works with individuals on the production side to develop transition plans to successfully support the new application – Users may • • • • Require Training Require remedial training in related skill sets Need to acquire entirely new skill sets Will have job reclassification issues Resistance Management • A resistance management plan is a proactive approach to managing resistance • It is important to identify potential resistance points by defining – What resistance may look like – How to identify resistance – How to mitigate the impact of resistance In General • Change Management – Manages change as a process – Recognizes that projects deal with people – Helps people through the change with open and honest communication – Provides awareness of the new environment – Ensuring readiness to function competently Preparation For Major Change • It is important for organizations to understand – Impacts the implementation will have on their own internal operations • And to – Prepare proactively for those impacts Concerns • Organizational Change Management is concerned with: – Managing change as a process and recognizing that people are the focus – Providing direct, knowledgeable, and frequent communication The Change Problem • Change problem is – Some future state to be realized – Some current state to be left behind – A some structured, organized process for getting from the one to the other Change Answers Three Questions • How do we make the change? • What needs to be changed? • Why is it being changed? How Do We Make The Change? • How do we get people to – Be more open? – Assume more responsibility? – Be more creative? What Needs To Be Changed? • • • • • What are we trying to accomplish? What changes are necessary? What indicators will signal success? What standards apply? What measures of performance are we trying to affect? Why Is It Being Changed? • Frequently chains and networks of business must be traced out before one finds the “true” reason for a change effort • CM wants to find the ultimate purposes of functions and find new and better ways of performing them – Why do we do what we do? – Why do we do it the way we do it? The Theories • • • • • Satir’s Change Process Model Kubler-Ross Stages of Change Model Kotter’s Phases of Change Model Lewin’s Dynamic Stability Model Prosci Change Management Model Satir’s Change Process Model • Satir’s change model is one of many tools she invented to enhance communication and encourage growth – “Change” is the project announcement which leads to a period of uncertainty, chaos, and productivity decreases – As people learn more and receive training/coaching, their productivity begins to rise – There is a period of flux until the new system becomes the status quo. Kubler-Ross Stages of Change Model • Describes the process by which people deal with grief – Significant changes in the working environment can bring about a form of grief Kubler-Ross Stages of Change Model • Five stages – Denial: The initial stage: "It can't be happening." – Anger: "Why ME? It's not fair?!" Recognition of changes in the day-today routine, perceived (or real) loss of prestige, power, knowledge, movement to the new state where things are unfamiliar and uncomfortable. – Bargaining: "Just let me live to see my son graduate." A sense of “just leave me alone”, or “just don’t change this one particular thing too”. Sometimes expressed as “as long as I don’t lose anything”, or “just make sure I get the training I need”. – Depression: "I'm so sad, why bother with anything?" When a system first implements feelings like “this is too hard”, “this is too slow”, “this takes too much work”, and “this is stupid” are not uncommon. – Acceptance: "It's going to be OK." Once people get used to the new system, they begin to accept it, and in time will defend it as strongly as they defended the old system. Kotter • Kotter’s change phases model deals with the phases of change Lewin’s Dynamic Stability Model • Refers to “unfreezing, changing, and refreezing” – It gives rise to thinking about a staged approach to changing things. Looking before you leap is usually sound practice. • Using Lewin’s approach as a starting point – Most change associated with projects comes from the envisioning of some future state yet to be realized – To arrive at the “to be” state, it is important to understand the “as is” state. Prosci Change Management Model • Prosci – Is a nationally recognized research and development company that specializes in bench-marking change management best practices – Has made a significant step forward in the integration of organizational change management and project management – Released its Change Management Process • Following eight years of research with over 1000 organizations Prosci Change Management Model • Built into the process are scalable and flexible components for customizing OCM activities to the specific organizational change being implemented – ADKAR (Awareness, Desire, Knowledge, Ability, Reinforcement) system for working through change • Includes – Tools to perform organizational analysis – Templates which can be customized to aid the process of preparing organizations for change Selecting a Change Strategy • • • • • • • • Degree of resistance Target population The stakes Time frame Expertise Dependency Organizational Strategy Funding Basic Change Management Steps • Provide awareness of the change that is going to occur • Ensure there is understanding about why the change needs to happen and the benefits of that change • Facilitate acceptance of the change • Act as someone who cares, listens, and responds to individual needs and concerns • Manage people and expectations • Assist people to use their insights, skills, and sense of values to move forward with organization/team efforts. In Summary • Organizational Change Management is an important part of any process implementation • Getting the people to accept the change is essential in project success • Organizational change management is made up of seven essential components – – – – – – – Sponsor management End-user communication Readiness Coaching Training Transition Planning Resistance Management In Summary • Change Management – helps answer the question “how are we going to move from this current state to the future state?” – is drawn from the fields of psychology, sociology, business administration, economics, industrial engineering, systems engineering, and the study of human and organizational behavior • Change Management and Project Management must work together to ensure project success and acceptance of the change brought about by new systems An Improvisational Model of Change Management: The Case of Groupware Technologies Wanda J. Orlikowski and J. Debra Hofman Massachusetts Institute of Technology Sloan School of Management 50 Memorial Drive Cambridge MA 02142-1347 Sloan Management Review, January 1997 Table of Contents Acknowledgments Abstract Introduction An Improvisational Model for Managing Change Case Example: Zeta Summary of Zeta Case Enabling Conditions Aligning Key Change Dimensions Dedicating Resources for Ongoing Support Conclusions Footnotes References Figures ACKNOWLEDGMENTS We would like to thank the editor and reviewers for their helpful comments on an earlier version of this manuscript. We gratefully appreciate the research support of MIT's Center for Coordination Science and Center for Information Systems Research. An Improvisational Model of Change Management:The Case of Groupware Technologies Abstract In this paper, we present an alternative way of thinking about technological change in organizations. This alternative approach is motivated by a recognition that traditional models for managing technological change - in which the major steps of the change are defined in advance and the organization then strives to implement these changes as planned in a specified period of time - are not particularly useful given the more turbulent, flexible, and uncertain organizational situations that many companies face today. Traditional models are also not particularly useful for helping the implementation of technologies such as groupware whose unprecedented, openended, and context-specific nature make it difficult to predefine the exact changes to be realized and to predict their likely organizational impact. We suggest an alternative model of managing technological change, one that reflects the dynamic and variable nature of contemporary organizations and technologies, and which accommodates iterative experimentation, use, and learning over time. We label such a model of managing technological change "improvisational," and suggest that it may enable organizations to take advantage of the evolving capabilities, emerging practices, and unanticipated outcomes that accompany use of new technologies in contemporary organizations. Introduction In the preface to her discussion of technology design, Suchman (1987: vii) refers to two different approaches to open sea navigation -- the European and the Trukese: The European navigator begins with a plan -- a course -- which he has charted according to certain universal principles, and he carries out his voyage by relating his every move to that plan. His effort throughout his voyage is directed to remaining "on course." If unexpected events occur, he must first alter the plan, then respond accordingly. The Trukese navigator begins with an objective rather than a plan. He sets off toward the objective and responds to conditions as they arise in an ad hoc fashion. He utilizes information provided by the wind, the waves, the tide and current, the fauna, the stars, the clouds, the sound of the water on the side of the boat, and he steers accordingly. His effort is directed to doing whatever is necessary to reach the objective. (Berreman 1966, p.347) Like Suchman, we too find this contrast in approaches instructive, and will use it here to motivate our discussion of managing technological change. In particular, we suggest that how people think about managing change in organizations most often resembles the European approach to navigation. That is, they believe they need to start with a plan for the change, charted according to certain general organizational principles, and that they need to relate their actions to that plan, ensuring throughout that the change remains on course. However, when we examine how change actually occurs in practice, we find that it much more closely resembles the voyage of the Trukese. That is, people end up responding to conditions as they arise, often in an ad hoc fashion, doing whatever is necessary to implement change. In a manner similar to Argyris and Schon's (1978) contrast between espoused theories and theoriesin-use, we suggest that there is a discrepancy between how people think about technological change and how they do it. Moreover, we suggest that this discrepancy significantly contributes to the difficulties and challenges that contemporary organizations face as they attempt to introduce and effectively implement technology-based change. Traditional ways of thinking about technological change have their roots in Lewin's (1952) threestage change model of "unfreezing," "change," and "refreezing" (Kwon and Zmud, 1987). According to this model, the organization prepares for change, implements the change, and then strives to regain stability as soon as possible. Such a model, which treats change as an event to be managed during a specified period (Pettigrew, 1985), may have been appropriate for organizations that were relatively stable, bounded, and whose functionality was sufficiently fixed to allow for detailed specification. Today however, given more turbulent, flexible, and uncertain organizational and environmental conditions, such a model is becoming less appropriate; hence, the discrepancy. This discrepancy is particularly pronounced when the technology being implemented is openended and customizable, as in the case of the new information technologies that have come to be known as groupware.[1] Groupware technologies provide electronic networks that support communication, coordination, and collaboration through facilities such as information exchange, shared repositories, discussion forums, and messaging. Such technologies are typically designed with an open architecture that is adaptable by end users, allowing them to customize existing features and create new applications (DeJean and DeJean, 1991; Malone et al., 1992). Rather than automating a predefined sequence of operations and transactions, these technologies tend to be general-purpose tools which are used in different ways across various organizational activities and contexts. Organizations need the experience of using groupware technologies in particular ways and in particular contexts to better understand how they may be most useful in practice. In such a technological context, the traditional change model is thus particularly discrepant. The discrepancy is also evident when organizations are using information technologies to attempt unprecedented and complex changes such as global integration or distributed knowledge management. A primary example of this is the current attempt by many companies to redefine and integrate global value chain activities which were previously managed independently. While there is typically some understanding up front of the magnitude of such a change, the depth and complexity of the interactions among these activities is only fully understood as the changes are implemented. For many organizations, such initiatives represent a new ball game, not only because they haven't played the game before but because most of the rules are still evolving. In a world with uncertain rules, the traditional model for devising and executing a game plan is very difficult to enact. And as recent strategy research has suggested (Mintzberg, 1994; McGrath and McMillan, 1995), planning in such circumstances is more effective as an ongoing endeavor, reflecting the changing and unfolding environments with which organizations interact. In many situations, therefore, predefining the technological changes to be implemented and accurately predicting their organizational impact is not feasible. Hence, the models of planned change that often inform implementation of new technologies are less than effective. We suggest that what would be more appropriate is a way of thinking about change that reflects the unprecedented, uncertain, open-ended, complex, and flexible nature of the technologies and organizational initiatives involved. Such a model would enable organizations to systematically absorb, respond to, and even leverage unexpected events, evolving technological capabilities, emerging practices, and unanticipated outcomes. Such a model for managing change would accommodate -- indeed, encourage -- ongoing and iterative experimentation, use, and learning. Such a model sees change management more as an ongoing improvisation than a staged event. In this paper, we propose such an alternative model. After presenting the model, we describe a case study of groupware implementation in a customer support organization to illustrate the value of this alternative model in practice. We conclude by discussing the conditions under which such an improvisational model may be a powerful way of managing the implementation and use of advanced technologies. An Improvisational Model for Managing Change The improvisational model for managing technological change is based on research we have done into the implementation and use of open-ended information technologies. The model rests on two major assumptions which differentiate it from traditional models of change: first, that the changes associated with technology implementations constitute an ongoing process rather than an event with an end point after which the organization can expect to return to a reasonably steady state; and second, that the various technological and organizational changes made during the ongoing process cannot, by definition, all be anticipated ahead of time. Given these assumptions, our improvisational change model recognizes three different types of change: anticipated, emergent, and opportunity-based. These change types are elaborations on Mintzberg's (1987) distinction between deliberate and emergent strategies. Here, we distinguish between anticipated changes -- changes that are planned ahead of time and occur as intended -and emergent changes -- changes that arise spontaneously out of local innovation and which are not originally anticipated or intended. An example of an anticipated change would be the implementation of electronic mail software which accomplishes its intended aim to facilitate increased and quicker communication among organizational members. An example of an emergent change would be the use of the electronic mail network as an informal grapevine disseminating rumors throughout an organization. This use of e-mail is typically not planned or anticipated when the network is implemented, but often emerges tacitly over time in particular organizational contexts. We further differentiate these two types of changes from opportunity-based changes -- changes that are not anticipated ahead of time but are introduced purposefully and intentionally during the change process in response to an unexpected opportunity, event, or breakdown. For example, as companies gain experience with the World Wide Web, they are finding opportunities to apply and leverage its capabilities in ways that were not anticipated or planned before the introduction of the Web. Both anticipated and opportunity-based changes involve deliberate action, in contrast to emergent changes which arise spontaneously and usually tacitly out of people's practices with the technology over time (Orlikowski, 1996). These three types of change build on each other over time in an iterative fashion (see Figure 1). While there is no predefined sequence in which the different types of change occur, the deployment of new technology often entails an initial anticipated organizational change associated with the installation of the new hardware/software. Over time, however, use of the new technology will typically involve a series of opportunity-based, emergent, and further anticipated changes, the order of which cannot be determined in advance because the changes interact with each other in response to outcomes, events, and conditions arising through experimentation and use. One way of thinking about this model of change is to consider, as an analogy, a jazz band. While members of a jazz band, unlike members of a symphony orchestra, do not decide in advance exactly what notes each is going to play, they do decide ahead of time what musical composition will form the basis of their performance. Once the performance begins, each player is free to explore and innovate, departing from the original composition. Yet, the performance works because all members are playing within the same rhythmic structure and have a shared understanding of the rules of this musical genre. What they are doing is improvising -- enacting an ongoing series of local innovations which embellish the original structure, respond to spontaneous departures and unexpected opportunities, and iterate and build on each other over time. Using our earlier terminology, the jazz musicians are engaging in anticipated, opportunitybased, and emergent action during the course of their performance to create an effective and creative response to local conditions. Similarly, an improvisational model for managing technological change in organizations is not a predefined program of change charted by management ahead of time. Rather, it recognizes that technological change is an iterative series of different changes, many unpredictable at the start, that evolve out of practical experience with the new technologies. Using such a model to manage change requires a set of processes and mechanisms to recognize the different types of change as they occur and to respond effectively to them. The illustrative case presented below suggests that where an organization is open to the capabilities offered by a new technological platform and willing to embrace an improvisational change model, innovative organizational changes can be achieved. Case Example: Zeta Zeta is one of the Top 50 software companies in the US, with $100 million in revenues and about 1000 employees. It produces and sells a range of powerful software products providing capabilities such as decision support, executive information, and marketing analysis. Zeta is headquartered in the Midwest, with sales and client service field offices throughout the world. Specialists in the Customer Service Department (CSD) at Zeta provide technical support via telephone to clients, consultants, value-added resellers, Zeta client service representatives in the field, and other Zeta employees who use the products. This technical support can be quite complex. Specialists typically devote several hours of research to each problem, often searching through reference material, attempting to replicate the problem, and/or reviewing program source code. Some incidents require interaction with members of other departments such as quality assurance, documentation, and product development. The CSD employs approximately fifty specialists and is headed by a director and two managers. In 1992, the CSD purchased the Lotus Notes groupware technology within which they developed a new Incident Tracking Support System (ITSS) to help them log customer calls and keep a history of progress towards resolving the customers' problems. Following a successful pilot of the new system, the CSD decided to commit to the Notes platform and to deploy ITSS throughout its department. The acquisition of new technology to facilitate customer call tracking was motivated by a number of factors. The existing tracking system was a home-grown system which had been developed when the department was much smaller and Zeta's product portfolio much narrower. The system was not real-time, entry of calls was haphazard, information accuracy was a concern, and performance was slow and unreliable. It provided little assistance for reusing prior solutions and no support for the management of resources in the department. The volume and complexity of calls to the CSD had increased in recent years due to the introduction of new products, the expanded sophistication of existing products, and the extended range of operating platforms supported. Such shifts had made replacement of the tracking system a priority, as CSD managers were particularly concerned that the home-grown system provided no ability to track calls, query the status of particular calls, apprehend the workload, balance resources, identify issues and problems before they became crises, and obtain up-to-date and accurate documentation on work in progress and work completed. In addition, calls would occasionally be lost, as the slips of paper on which they were recorded would get mislaid or inadvertently thrown away. The initial introduction of the new ITSS system was accompanied by anticipated changes in the nature of both the specialists' and managers' work. In contrast to the previous system, which had been designed to only capture a brief description of the problem and its final resolution, ITSS was designed to allow specialists to document every step they took in their process of resolving a particular incident. That is, it was designed to enable the capture of a full incident history. As specialists began to use ITSS this way, the focus of their work shifted from primarily research-solving problems--to both research and documentation--solving problems and documenting work in progress. The ITSS database quickly began to grow as each specialist documented his/her resolution process in detail. While documenting calls took time, it also saved time by providing a rich database of information which could be searched for potential resolutions. Moreover, this new database of rich information served as an unexpected and informal learning mechanism by providing the specialists with exposure to a wide range of problems and solutions. As one specialist noted: "If it is quiet, I will check on my fellow colleagues to see what ... kind of calls they get, so I might learn something from them. ... just in case something might ring a bell when someone else calls." At the same time, however, using the ITSS database as a sole source of information did pose some risk, since there were no guarantees as to the accuracy of the information. To minimize this risk, the specialists tacitly developed a set of informal quality indicators to help them distinguish between reliable and unreliable data. For example, resolutions that were comprehensively documented, documented by certain individuals, or verified by the customer were considered more reliable sources of information. In addition to these changes in specialists' work, use of the new system by the CSD managers improved their ability to control the department's resources. Specialists' use of ITSS to document calls provided managers with detailed workload information, which was used to justify increased headcount and adjust work schedules and shift assignments on a dynamic and as-needed basis. ITSS also supplied managers with more accurate information on specialists' work process, for example, the particular steps followed to research and resolve a problem, the areas in which specialists sought advice or were stalled, and the quality of their resolutions. As managers began to rely on the ITSS data to evaluate specialists' performance, they expanded the criteria they used to do this evaluation. For example, quality of work-in-progress documentation was included as an explicit evaluation criterion and documentation skills became a factor in the hiring process. As the CSD gained experience with and better understood the capabilities of the groupware technology, the managers opportunistically introduced a change in the structure of the department to further leverage these capabilities. This change had not been planned prior to the implementation of ITSS, but the growing reliance on ITSS and an appreciation of the capabilities of the groupware technology created an opportunity for the CSD to redistribute call loads. In particular, "first line" and "second line" support levels were established, with junior specialists being assigned to the first line, and senior specialists to the second line. Partnerships were created between the less experienced, junior specialists and the more experienced, senior specialists. Front line specialists now took all incoming calls, resolved as many of these as they could, and then electronically transferred calls to their second line partners when they were overloaded or had calls which were especially difficult. In addition to handling calls transferred to them, senior specialists were expected to proactively monitor their front line partners' progress on calls and to provide assistance as needed. While this partnership idea was conceptually sound, it regularly broke down in practice. Junior specialists were often reluctant to hand off calls, fearing that such transfers would reflect poorly on their competence or that they would be overloading their more senior partners. Senior specialists, in turn, were usually too busy resolving complex incidents to spend much time monitoring their junior partners' call status or progress. In response to this unanticipated breakdown in the partnership idea, CSD managers introduced another opportunity-based structural change. They created a new role, that of an intermediary, which was filled by a senior specialist whose job it was to mediate between the first and second lines, regularly monitoring junior specialists' call loads and work in progress, and dynamically reassigning calls as appropriate. The new intermediary role served as a buffer between the junior and senior specialists, facilitating the transfer of calls and relieving senior specialists of the responsibility to constantly monitor their front line partners. With these structural changes, ITSS in effect changed the prior undifferentiated and fixed division of labor within the department to a dynamic distribution of work reflecting different levels of experience, various areas of expertise, and shifting workloads. In response to the new distribution of work, managers adjusted their evaluation criteria to reflect the changed responsibilities and roles within the CSD. Another change which emerged over time was a shift in the nature of collaboration within the CSD from a primarily reactive mode of collaboration to one that was more proactive. Because all specialists now had access to the database of calls being worked on in the department, they began to browse through each others' calls to see which ones they could provide help on. Rather than waiting to be asked if they had a solution to a particular problem (which is how they had solicited and received help in the past), specialists actively browsed through the database of calls seeking problems for which they could offer help. This shift from solicited to unsolicited assistance was facilitated by the capabilities of the groupware technology, the complex nature of the work, existing evaluation criteria that stressed teamwork, and the long-standing cooperative and collegial culture in the CSD. Consider the following specialists' comments: "Everyone realizes that we all have a certain piece of the puzzle ... I may have one critical piece, and Jenny may have another piece. ... And if we all work separately, we're never going to get the puzzle together. But by everybody working together, we have the entire puzzle"; "Here I don't care who grabs credit for my work ... this support department does well because we're a team, not because we're all individuals" (Orlikowski, 1995). Managers responded to this shift in work practices by adjusting specialists' evaluation criteria to specifically take unsolicited help giving into account. As one manager explained: "When I'm looking at incidents, I'll see what help other people have offered, and that does give me another indication of how well they're working as a team." After approximately one year of using ITSS, the CSD implemented two further organizational changes around the groupware technology. Both of these had been anticipated in the initial planning for ITSS, although the exact timing for their implementation had been left unspecified. First, the ITSS application was installed in three overseas support offices, with copies of all the ITSS databases replicated regularly across the four support sites (US, UK, Australia, and Europe). This provided all support specialists with a more extensive knowledge base on which to search for possibly helpful resolutions. The use of ITSS in all the support offices further allowed specialists to transfer calls across offices, essentially enacting a global support department within Zeta. Second, the CSD initiated and funded the development of a number of bug tracking systems which were implemented within groupware and deployed in Zeta's departments of product development, product management, and quality assurance. These bug tracking applications, which were modeled on the ITSS application, were linked into ITSS and enabled specialists to enter any bugs they had discovered in their problem resolution activities directly into the relevant product's bug tracking system. Previously, the reporting of bugs by the CSD to other departments was done manually, took many weeks, and involved minimal communication. With the new bug tracking applications and linkages to ITSS, specialists could also directly query the status of particular bugs, and even change their priority if customer calls indicated that such an escalation was needed. Specialists in particular found this change very valuable. For the other departments, the link with ITSS allowed users such as product managers and developers to access the ITSS records and trace the particular incidents that had uncovered certain bugs or uncovered certain use problems. Only the developers had some reservations about the introduction of the bug tracking application, reservations that were associated with the severe time constraints under which they worked to produce new releases of Zeta products. In addition to the improved coordination and integration achieved with other departments and offices, the CSD also realized further opportunity-based innovations and emergent changes within their own practices. For example, as the number of incidents in ITSS grew, some of the senior specialists began to realize that the information in the system could be used to help train newcomers. By extracting certain records from the ITSS database, these specialists opportunistically created a training database of sample problems with which newly hired specialists could work. Using the communication capabilities of the groupware technology, these senior specialists could monitor their trainees' progress through the sample database and intervene to educate when necessary. As one senior specialist noted: "So we can kind of keep up to the minute on their progress. ... If they're on the wrong track, we can intercept them and say, 'Go check this, go look at that.' But it's not like we have to actually sit with them and review things. It's sort of an on-line, interactive thing." As a result of this new training mechanism, the time that it took for new specialists to begin taking customer calls was reduced from eight weeks to about five weeks. An emergent change realized during this time related to access control. An ongoing issue for the CSD was who (if anybody) outside of the CSD should be given access to the ITSS database with its customer call information and specialists' work-in-progress documentation. This issue was not one that had been anticipated prior to the acquisition of the technology. While the managers were worried about how to respond to the increasing demand for access to ITSS as the database became more valuable and word about its content spread throughout the company, they continued to handle each access request as it came up. Over time, they had used a variety of control mechanisms ranging from giving limited access to some "trusted" individuals, generating summary reports of selected ITSS information for others, and refusing any access to still others. As one of the managers explained, it was only after some time that they realized that their various ad hoc responses to different access requests amounted to, in essence, a set of rules and procedures about access control. By responding locally to a variety of requests and situations over time, an implicit access control policy for the use of ITSS had evolved and emerged. Summary of Zeta Case Figure 2 represents the change model around the groupware technology followed by Zeta in its CSD. Along with the introduction of the new technology and the development of the ITSS application, the CSD first implemented some planned organizational changes, expanding the specialists' work to include work-in-progress documentation and adjusting the managers' work to take advantage of the real-time access to workload information. These changes were anticipated prior to introducing the new technology. As specialists and managers began to work in new ways with the technology, a number of changes emerged in practice, such as the specialists developing norms to determine the quality and value of prior resolutions, and managers paying attention to documentation skills in hiring and evaluation decisions. Building on these anticipated and emergent changes, the CSD introduced a set of opportunitybased changes, creating junior-senior specialist partnerships to take advantage of the shared database and communication capabilities of the technology, and then adding the new role of intermediary in response to the unexpected problems that arose around partnership and work reassignment. These changes were not anticipated at the start, nor did they simply emerge spontaneously in working with the new technology. Rather, they were conceived of and implemented in situ and in response to the opportunities and issues which arose as the CSD gained experience and developed a deeper understanding of the new technology and their particular use of it. This change process around the groupware technology continued through the second year at Zeta when some anticipated organizational changes were followed by both emergent and opportunity-based changes associated with unfolding events and the learning and experience gained by using the new technology in practice. Overall, what we see here is an iterative and ongoing series of anticipated, emergent, and opportunity-based changes which allowed Zeta to learn from practical experience, respond to unexpected outcomes and capabilities, and adapt both the technology and the organization as appropriate. In effect, Zeta's change model cycles through anticipated, emergent, and opportunity-based organizational changes over time. It is a change model which explicitly recognizes the inevitability, legitimacy, and value of ongoing learning and change in practice. Enabling Conditions Clearly, there were certain aspects of the CSD and the Zeta organization which enabled it to effectively adopt an improvisational change model to implement and use the groupware technology. Our research at Zeta and other companies suggests that at least two sets of enabling conditions are critical: aligning key dimensions of the change process, and dedicating resources to provide ongoing support for the ongoing change process. We will consider each in turn. Aligning Key Change Dimensions An important influence on the effectiveness of any change process is the interdependent relationship among three dimensions: the technology, the organizational context (including culture, structure, roles and responsibilities), and the change model used to manage change (see Figure 3). Ideally, the interaction among these three dimensions is compatible, or at a minimum, not in opposition. First, consider the relation of the change model and the technology being implemented. When the technology has been designed to operate like a "black box," allowing little adaptation by users, an improvisational approach may not be more effective than the traditional approach to technology implementation. Similarly, where the technology is well-established and its impacts are reasonably well understood, a traditional planned change approach may be effective. However, when the technology being implemented is new and unprecedented, and additionally has an open-ended and customizable nature, an improvisational model providing the flexibility for organizations to adapt and learn through use becomes more appropriate. Such is the case, we believe, with the groupware technologies available today. Second, the relation of the change model to organizational context is also relevant. A flexible change model, while likely to be problematic in a rigid, control-oriented or bureaucratic culture, is well-suited to a more informal and cooperative culture such as the one characterizing the CSD. In another study (Gallivan et al., 1994), we examined the MidCo organization's successful adoption and implementation of CASE (Computer-Aided Software Engineering) tools within its IS organization. While MidCo, a multi-national chemical products company with revenues of over $1.5 billion, was a relatively traditional organization in many ways, key aspects of its culture--a commitment to total quality management, a focus on organizational learning and employee empowerment, as well as a long-term time orientation--were particularly compatible with the improvisational model it used to manage ongoing organizational changes around the new software development technology. Finally, there is the important relationship between the technology and the organizational context. At Zeta, the CSD's cooperative, team-oriented culture was compatible with the collaborative nature of the new groupware technology. Indeed, CSD's existing culture allowed it to take advantage of the opportunity for improved collaboration afforded by the groupware technology. Moreover, when existing roles, responsibilities, and evaluation criteria became less salient, the CSD managers expanded or adjusted these to reflect new uses of the technology. Compare these change efforts to those of Alpha, a professional services firm which introduced the Notes groupware technology to leverage knowledge sharing and to coordinate distributed activities (Orlikowski, 1992). While the physical deployment of groupware grew very rapidly, anticipated benefits were realized much more slowly. Key to the reluctance to use groupware for knowledge sharing was a perceived incompatibility between the collaborative nature of the technology and the individualistic and competitive nature of the organization. As in many professional services firms, Alpha rewarded individual rather than team performance, and promoted employees via an "up or out" set of evaluation criteria. In such an environment, knowledge sharing via a global Notes network was seen to threaten status, distinctive competence, and power. In contrast to Zeta, managers at Alpha did not adjust policies, roles, incentives, and evaluation criteria to better align their organization with the intended use and capabilities of the technology they had invested in. Dedicating Resources for Ongoing Support An ongoing change process requires dedicated support over time to adapt both the organization and the technology to changing organizational conditions, use practices, and technological capabilities. Opportunity-based change, in particular, depends on the ability of the organization to notice and recognize opportunities, issues, breakdowns, and unexpected outcomes as they arise. This requires attention on the part of appropriate individuals in the organization to track use of the technology over time and to implement or initiate organizational and/or technological adjustments which will mitigate or take advantage of the identified problems or opportunities. At Zeta, it was the managers and technologists who primarily played this role, incorporating it into their other responsibilities. So, for example, the managers adjusted the structure of their department by introducing first line/second line partnerships to facilitate a dynamic division of labor, and then made further adaptations by introducing an intermediary role to overcome some unanticipated difficulties associated with the initial change. Similarly, the technologists working with the CSD incorporated enhancements to the ITSS system as they realized ways of improving ease of use and access time. The CSD's commitment to noticing and responding to changes when appropriate did not end after the implementation of the technology. The managers clearly realized that the change process they had embarked on with the use of groupware was an ongoing one, as one manager noted: "We've had ITSS for two years. I'm surprised that the enthusiasm hasn't gone away. ... I think it's because it's been changed on a regular basis....Knowing that [the changes are going to get implemented keeps you wanting to think about it, and keep going." Ongoing change around the use of groupware technology also requires ongoing adjustments to the technology itself as users learn and gain experience with the new technology's capabilities and their uses of it over time. Without dedicated technology support to implement these adaptations and innovations, the continued experimentation and learning in use central to an improvisational change model may be stalled or thwarted. At Zeta, the CSD's use of groupware and ITSS was supported by a dedicated technology group. Initially consisting of one developer, this group grew over time as use of the technology expanded. After two years of technology use, the group included four full-time technologists who provided technology support for the various systems that had been deployed within Zeta via the Notes platform. The group also maintained strong ties with all their users through regular meetings and communications with them. This dedicated and ongoing technical support ensured that the technology would continue to be updated, adjusted, and expanded as appropriate. The value of ongoing support to enable ongoing organizational and technological change was similarly important in another organization we studied, the R&D division of a large Japanese manufacturing firm (Orlikowski et al., 1995). A newly-formed product development team within the R&D division installed its own groupware technology, the Usenet news-system (a computer conferencing system). Similar to Zeta, the team's use of this new technology also iterated among anticipated, emergent, and opportunity-based changes over time. Here, a small group of users who had previously used the groupware technology took on the responsibility to manage and support its ongoing use for themselves and their colleagues. They tracked technology usage and project events as they unfolded, responded as appropriate with adjustments to communication policies and technology functionality, and proactively made changes to the team's use of the conferencing system to leverage opportunities as they arose. Conclusions Global, responsive, team-based, networked--these are the watchwords for organizations of the nineties. As managers redesign and reinvent organizations in a new image, many are turning to information technologies to enable more flexible processes, greater knowledge sharing, and global integration. At the same time, effectively implementing the organizational changes associated with these technologies remains difficult in a turbulent, complex, and uncertain environment. We believe that a significant factor contributing to these challenges is the growing discrepancy between the way people think about technological change and the way they actually do it. We have proposed here that people's assumptions about technology-based change and the way it is supposed to happen are based on models which are no longer appropriate. Traditional models for managing technology-based change treat change as a sequential series of predefined steps which are bounded within a specified period of time. With these models as a guide, it makes sense -- as the European navigator does -- to define a plan of action in advance of the change and track events against the plan, striving throughout the change to remain on track. Deviations from the intended course -- the anticipated versus the actual -- then require explanation, the subtle (and sometimes not-so-subtle) implication being that there has been some failure, some inadequacy in planning, that has led to this deviation. Indeed, many organizational mechanisms such as budgeting and resource planning are based on these notions. The problem is that change as it actually occurs today more closely resembles the voyage of the Trukese navigator, and the models and mechanisms most commonly used to think about and manage change do not effectively support the experience of change in practice. In this paper, we have offered an improvisational change model as a different way of thinking about managing the introduction and ongoing use of information technologies to support the more flexible, complex, and integrated structures and processes demanded by organizations today. In contrast to traditional models of technological change, this improvisational model recognizes that change is typically an ongoing process made up of opportunities and challenges which are not necessarily predictable at the start. It defines a process which iterates among three types of change -- anticipated, emergent and opportunity-based -- and which allows the organization to experiment and learn as it uses the technology over time. Most importantly, it offers a systematic approach with which to understand and better manage the realities of technology-based change in organizations today. Because such a model requires a flexible and responsive environment, adopting it implies that managers relinquish what is often an implicit paradigm of "command and control" (Zuboff, 1995). An improvisational model, however, is not anarchy and neither is it a matter of "muddling through." We are not implying that planning is an activity which is unnecessary or should be abandoned. We are suggesting, instead, that a plan is a guide rather than a blueprint (Suchman, 1987), and that deviations from the plan, rather than being seen as a symptom of failure, are to be expected and actively managed. Rather than pre-defining each step to be taken and then controlling events to fit the plan, the idea is to create an environment which facilitates improvisation. In such an environment, management provides, supports, and nurtures a set of expectations, norms, and resources which guide the ongoing change process. Malone (1996) refers to such a style of managing as "cultivation." Consider again the jazz band. While each member of the band is free to improvise during the performance, the result is typically not discordant. Rather, it is harmonious because each player operates within an overall framework, conforms to a shared set of values and norms, and has access to a known repertoire of rules and resources. Similarly, while many of the changes at Zeta's CSD were not pre-planned, they were compatible with the overall objectives and intentions of the department's members, their shared norms and team orientation, and the designs and capabilities of the technology at hand. Effectively executing an improvisational change model also requires aligning the technology and the organizational context with the change model. Such alignment does not happen automatically. It requires explicit and ongoing examination and adjustment, where and when necessary, of the technology and the organization. As such, mechanisms and resources allocated to ongoing support of the change process are critical. Tracking and noticing events and issues as they unfold is a responsibility that needs to be owned by appropriate members of the organization. Along with the responsibility, these organizational members require the authority, credibility, influence, and resources to implement the ongoing changes. Creating the environment, aligning the technology, context, and change model, and distributing the appropriate responsibility and resources are critically important in the effective use of an improvisational model, particularly as they represent a significant (and therefore challenging) departure from the standard practice in effect in many organizations today. It is important to bear in mind, however, that an improvisational model of change will not apply to all situations. As we have noted, it is most appropriate for open-ended, customizable technologies or for complex and unprecedented change. In addition, as one of our reviewers noted, "jazz is not everyone's 'cup of tea'... some people are incapable of playing jazz much less able to listen to what they consider to be 'noise.'" We noted above that some cultures do not support experimentation and learning. As a result, they are probably not receptive to an improvisational model, and are less likely to succeed with it. However, as these organizations attempt to implement new organizational forms, they too may find an improvisational model to be a particularly valuable approach to managing technological change in the 21st century. References Argyris, C. and Schon, D.A. Organizational Learning, Reading, MA: Addison Wesley, 1978. DeJean, D. and DeJean, S.B. Lotus Notes at Work, New York: Lotus Books: 1991. Gallivan, M.J., Hofman, J.D., and Orlikowski, W.J. "Implementing Radical Change: Gradual Versus Rapid Pace," Proceedings of the Fifteenth International Conference on Information Systems, Vancouver, British Columbia, Canada, December 14-17, 1994: 325-339. Kwon, T.K. and Zmud, R.W. "Unifying the Fragmented Models of Information Systems Implementation," in R.J. Boland Jr. and R.A. Hirschheim (Eds.) Critical Issues in Information Systems Research, New York: John Wiley and Sons, 1987: 227-251. Lewin, K. "Group Decision and Social Change," in Newcombe, E. and Harley, R. (Eds.) Readings in Social Psychology, New York: Henry Holt, 1952: 459-473. Malone, T.W., Lai, K.Y. and Fry, C. "Experiments with OVAL: A Radically Tailorable Tool for Cooperative Work, Proceedings of the Third Conference on Computer Supported Cooperative Work, Toronto, Canada, November 1992: 289-297. Malone, T.W. Private communication. 1996. McGrath, R.G. and MacMillan, I.C. "Discovery-Driven Planning," Harvard Business Review, 72, 1, 1995: 44-54. Mintzberg, H. "The Fall and Rise of Strategic Planning," Harvard Business Review, 72, 1, 1994: 107-114. Orlikowski, W.J. "Learning from Notes: Organizational Issues in Groupware Implementation," Proceedings of the Third Conference on Computer Supported Cooperative Work, Toronto, November 1992: 362-369. Orlikowski, W.J. "Evolving with Notes: Organizational Change around Groupware Technology," Sloan School of Management Working Paper #3823, MIT, Cambridge, MA, 1995. Orlikowski, W.J. "Improvising Organizational Transformation over Time: A Situated Change Perspective," Information Systems Research, 7, 1, 1996: 63-92. Orlikowski W.J., Yates, J., Okamura, K. and Fujimoto, M. "Shaping Electronic Communication: The Metastructuring of Technology in Use," Organization Science, 6, 1995: 423-444. Pettigrew, A.M. The Awakening Giant. Oxford, UK: Blackwell Publishers, 1985. Suchman, L. Plans and Situated Actions: The Problem of Human Machine Communication. Cambridge, UK: Cambridge University Press, 1987. Zuboff, S. In the Age of the Smart Machine, New York: Basic Books, 1988 Footnotes [1] Not all goupware technologies are flexible and customizable (e.g., fixed-function electronic mail systems). We are interested here only in those that are (e.g., Lotus Notes). Leading Change: Why Transformation Efforts Fail by John P. Kotter Harvard Business Review Reprint 95204 HarvardBusinessReview MARCH-APRIL 1995 Reprint Number JOHN P. KOTTER LEADING CHANGE: WHY TRANSFORMATION EFFORTS FAIL 95204 NOEL M. TICHY AND RAM CHARAN THE CEO AS COACH: AN INTERVIEW WITH ALLIED SIGNAL’S LAWRENCE A. BOSSIDY 95201 ROBERT SIMONS CONTROL IN AN AGE OF EMPOWERMENT 95211 JOHN POUND THE PROMISE OF THE GOVERNED CORPORATION 95210 B. JOSEPH PINE II, DON PEPPERS, AND MARTHA ROGERS DO YOU WANT TO KEEP YOUR CUSTOMERS FOREVER? 95209 A. CAMPBELL, M. GOOLD, AND M. ALEXANDER CORPORATE STRATEGY: THE QUEST FOR PARENTING ADVANTAGE 95202 GEOFFREY OWEN AND TREVOR HARRISON WHY ICI CHOSE TO DEMERGE 95207 REGINA FAZIO MARUCA HBR CASE STUDY HOW DO YOU GROW A PREMIUM BRAND? 95205 SIMON JOHNSON AND GARY LOVEMAN WORLD VIEW STARTING OVER: POLAND AFTER COMMUNISM 95203 RICHARD O’BRIEN BOOKS IN REVIEW WHO RULES THE WORLD’S FINANCIAL MARKETS? 95206 PERSPECTIVES REDRAW THE LINE BETWEEN THE BOARD AND THE CEO JOHN G. SMALE • ALAN J. PATRICOF • DENYS HENDERSON • BERNARD MARCUS • DAVID W. JOHNSON 95208 HBR M A R C H - A P R I L 1 9 9 5 Leading Change: Why Transformation Efforts Fail by John P. Kotter Over the past decade, I have watched more than 100 companies try to remake themselves into significantly better competitors. They have included large organizations (Ford) and small ones (Landmark Communications), companies based in the United States (General Motors) and elsewhere (British Airways), corporations that were on their knees (Eastern Airlines), and companies that were earning good money (Bristol-Myers Squibb). These efforts have gone under many banners: total quality management, reengineering, right sizing, restructuring, cultural change, and turnaround. But, in almost every case, the basic goal has been the same: to make fundamental changes in how business is conducted in order to help cope with a new, more challenging market environment. A few of these corporate change efforts have been very successful. A few have been utter failures. Most fall somewhere in between, with a distinct DRAWINGS BY KURT VARGO tilt toward the lower end of the scale. The lessons that can be drawn are interesting and will probably be relevant to even more organizations in the increasingly competitive business environment of the coming decade. The most general lesson to be learned from the more successful cases is that the change process goes through a series of phases that, in total, usually require a considerable length of time. Skipping steps creates only the illusion of speed and never produces a satisfying result. A second very general John P. Kotter is the Konosuke Matsushita Professor of Leadership at the Harvard Business School in Boston, Massachusetts. He is the author of The New Rules: How to Succeed in Today’s Post-Corporate World (New York: Free Press, 1995), Corporate Culture and Performance, coauthored with James L. Heskett (New York: Free Press, 1992), and A Force for Change: How Leadership Differs from Management (New York: Free Press, 1990). Copyright © 1995 by the President and Fellows of Harvard College. All rights reserved. LEADING CHANGE lesson is that critical mistakes in any of the phases can have a devastating impact, slowing momentum and negating hard-won gains. Perhaps because we have relatively little experience in renewing organizations, even very capable people often make at least one big error. Error #1: Not Establishing a Great Enough Sense of Urgency Most successful change efforts begin when some individuals or some groups start to look hard at a company’s competitive situation, market position, technological trends, and financial performance. They focus on the potential revenue drop when an important patent expires, the five-year trend in declining margins in a core business, or an emerging market that everyone seems to be ignoring. They then find ways to communicate this information broadly and dramatically, especially with respect to crises, potential crises, or great opportunities that are very timely. This first step is essential because just getting a transformation program started requires the aggressive cooperation of many individuals. Without motivation, people won’t help and the effort goes nowhere. Compared with other steps in the change process, phase one can sound easy. It is not. Well over 50% of the companies I have watched fail in this first phase. What are the reasons for that failure? Sometimes executives underestimate how hard it can be to drive people out of their comfort zones. Sometimes they grossly overestimate how successful they have already been in increasing urgency. Sometimes they lack patience: “Enough with the preliminaries; let’s get on with it.” In many cases, executives become paralyzed by the downside possibilities. They worry that employees with seniority will become defensive, that morale will drop, that events will spin out of control, that short-term business results will be jeopardized, that the stock will sink, and that they will be blamed for creating a crisis. A paralyzed senior management often comes from having too many managers and not enough leaders. Management’s mandate is to minimize risk and to keep the current system operating. Change, by definition, requires creating a new system, which in turn always demands leadership. Phase one in a renewal process typically goes nowhere until enough real leaders are promoted or hired into senior-level jobs. Transformations often begin, and begin well, when an organization has a new head who is a good leader and who sees the need for a major change. If the renewal target is the entire company, the CEO is key. If change is needed in a division, the division general manager is key. When these individuals are not new leaders, great leaders, or change champions, phase one can be a huge challenge. Bad business results are both a blessing and a curse in the first phase. On the positive side, losing money does catch people’s attention. But it also gives less maneuvering room. With good business results, the opposite is true: convincing people of the need for change is much harder, but you have more resources to help make changes. But whether the starting point is good performance or bad, in the more successful cases I have witnessed, an individual or a group always facilitates a frank discussion of potentially unpleasant facts: about new competition, shrinking margins, decreasing market share, flat earnings, a lack of revenue growth, or other relevant indices of a declining competitive position. Because there seems to be an almost universal human tendency to shoot the bearer of bad news, especially if the head of the organization is not a change champion, executives in these companies often rely on outsiders to bring unwanted information. Wall Street analysts, custom- One chief executive officer deliberately engineered the largest accounting loss in the history of the company. 60 ers, and consultants can all be helpful in this regard. The purpose of all this activity, in the words of one former CEO of a large European company, is “to make the status quo seem more dangerous than launching into the unknown.” In a few of the most successful cases, a group has manufactured a crisis. One CEO deliberately engineered the largest accounting loss in the company’s history, creating huge pressures from Wall Street in the process. One division president commissioned first-ever customer-satisfaction surveys, knowing full well that the results would be terrible. He then made these findings public. On the surface, such moves can look unduly risky. But there is also risk in playing it too safe: when the urgency rate is not pumped up enough, the transformation process HARVARD BUSINESS REVIEW March-April 1995 Eight Steps to Transforming Your Organization Establishing a Sense of Urgency Examining market and competitive realities Identifying and discussing crises, potential crises, or major opportunities Forming a Powerful Guiding Coalition Assembling a group with enough power to lead the change effort Encouraging the group to work together as a team Creating a Vision Creating a vision to help direct the change effort Developing strategies for achieving that vision Communicating the Vision Using every vehicle possible to communicate the new vision and strategies Teaching new behaviors by the example of the guiding coalition Empowering Others to Act on the Vision Getting rid of obstacles to change Changing systems or structures that seriously undermine the vision Encouraging risk taking and nontraditional ideas, activities, and actions Planning for and Creating Short-Term Wins Planning for visible performance improvements Creating those improvements Recognizing and rewarding employees involved in the improvements Consolidating Improvements and Producing Still More Change Using increased credibility to change systems, structures, and policies that don’t fit the vision Hiring, promoting, and developing employees who can implement the vision Reinvigorating the process with new projects, themes, and change agents Institutionalizing New Approaches Articulating the connections between the new behaviors and corporate success Developing the means to ensure leadership development and succession HARVARD BUSINESS REVIEW March-April 1995 1 2 3 4 5 6 7 8 61 LEADING CHANGE cannot succeed and the long-term future of the organization is put in jeopardy. When is the urgency rate high enough? From what I have seen, the answer is when about 75% of a company’s management is honestly convinced that business-as-usual is totally unacceptable. Anything less can produce very serious problems later on in the process. Error #2: Not Creating a Powerful Enough Guiding Coalition Major renewal programs often start with just one or two people. In cases of successful transformation efforts, the leadership coalition grows and grows over time. But whenever some minimum mass is not achieved early in the effort, nothing much worthwhile happens. It is often said that major change is impossible unless the head of the organization is an active supporter. What I am talking about goes far beyond that. In successful transformations, the chairman or president or division general manager, plus another 5 or 15 or 50 people, come together and develop a shared commitment to excellent performance through renewal. In my experience, this group never includes all of the company’s most senior executives because some people just won’t buy in, at least not at first. But in the most successful cases, the coalition is always pretty powerful – in terms of titles, information and expertise, reputations and relationships. In both small and large organizations, a successful guiding team may consist of only three to five people during the first year of a renewal effort. But in big companies, the coalition needs to grow to the 20 to 50 range before much progress can be made in phase three and beyond. Senior managers always form the core of the group. But sometimes you find board members, a representative from a key customer, or even a powerful union leader. Because the guiding coalition includes members who are not part of senior management, it tends to operate outside of the normal hierarchy by definition. This can be awkward, but it is clearly necessary. If the existing hierarchy were working well, there would be no need for a major transformation. But since the current system is not working, reform generally demands activity outside of formal boundaries, expectations, and protocol. A high sense of urgency within the managerial ranks helps enormously in putting a guiding coalition together. But more is usually required. Someone needs to get these people together, help them develop a shared assessment of their company’s problems and opportunities, and create a minimum level of trust and communication. Off-site retreats, for two or three days, are one popular vehicle for accomplishing this task. I have seen many groups of 5 to 35 executives attend a series of these retreats over a period of months. Companies that fail in phase two usually underestimate the difficulties of producing change and thus the importance of a powerful guiding coalition. Sometimes they have no history of teamwork at the top and therefore undervalue the importance of this type of coalition. Sometimes they expect the team to be led by a staff executive from human resources, quality, or strategic planning instead of a key line manager. No matter how capable or dedicated the staff head, groups without strong line leadership never achieve the power that is required. In failed transformations, you often find plenty of plans and programs, but no vision. 62 HARVARD BUSINESS REVIEW March-April 1995 Efforts that don’t have a powerful enough guiding coalition can make apparent progress for a while. But, sooner or later, the opposition gathers itself together and stops the change. Error #3: Lacking a Vision In every successful transformation effort that I have seen, the guiding coalition develops a picture of the future that is relatively easy to communicate and appeals to customers, stockholders, and employees. A vision always goes beyond the numbers that are typically found in five-year plans. A vision says something that helps clarify the direction in which an organization needs to move. Sometimes the first draft comes mostly from a single individual. It is usually a bit blurry, at least initially. But after the coalition works at it for 3 or 5 or even 12 months, something much better emerges through their tough analytical thinking and a little dreaming. Eventually, a strategy for achieving that vision is also developed. In one midsize European company, the first pass at a vision contained two-thirds of the basic ideas that were in the final product. The concept of global reach was in the initial version from the beginning. So was the idea of becoming preeminent in certain businesses. But one central idea in the final version – getting out of low value-added activities – came only after a series of discussions over a period of several months. Without a sensible vision, a transformation effort can easily dissolve into a list of confusing and incompatible projects that can take the organization in the wrong direction or nowhere at all. Without a sound vision, the reengineering project in the accounting department, the new 360degree performance appraisal from the human resources department, the plant’s quality program, the cultural change project in the sales force will not add up in a meaningful way. In failed transformations, you often find plenty of plans and directives and programs, but no vision. In one case, a company gave out four-inch-thick notebooks describing its change effort. In mind-numbing detail, the books spelled out procedures, goals, methods, and deadlines. But nowhere was there a clear and compelling statement of where all this was leading. Not surprisingly, most of the employees with whom I talked were either confused or alienated. The big, thick books did not rally them together or inspire change. In fact, they probably had just the opposite effect. In a few of the less successful cases that I have seen, management had a sense of direction, but it was too complicated or blurry to be useful. Recently, I asked an executive in a midsize company to describe his vision and received in return a barely comprehensible 30-minute lecture. Buried in his answer were the basic elements of a sound vision. But they were buried – deeply. A useful rule of thumb: if you can’t communicate the vision to someone in five minutes or less and get a reaction that signifies both understanding and interest, you are not yet done with this phase of the transformation process. Error #4: Undercommunicating the Vision by a Factor of Ten I’ve seen three patterns with respect to communication, all very common. In the first, a group actually does develop a pretty good transformation vision and then proceeds to communicate it by holding a single meeting or sending out a single communication. Having used about .0001% of the yearly intracompany communication, the group is startled that few people seem to understand the A vision says something that clarifies the direction in which an organization needs to move. HARVARD BUSINESS REVIEW March-April 1995 new approach. In the second pattern, the head of the organization spends a considerable amount of time making speeches to employee groups, but most people still don’t get it (not surprising, since vision captures only .0005% of the total yearly communication). In the third pattern, much more effort goes into newsletters and speeches, but some very visible senior executives still behave in ways that are antithetical to the vision. The net result is that cynicism among the troops goes up, while belief in the communication goes down. Transformation is impossible unless hundreds or thousands of people are willing to help, often to the point of making short-term sacrifices. Employees will not make sacrifices, even if they are unhappy with the status quo, unless they believe that useful change is possible. Without credible communication, and a lot of it, the hearts and minds of the troops are never captured. This fourth phase is particularly challenging if the short-term sacrifices include job losses. Gain63 LEADING CHANGE ing understanding and support is tough when downsizing is a part of the vision. For this reason, successful visions usually include new growth possibilities and the commitment to treat fairly anyone who is laid off. Executives who communicate well incorporate messages into their hour-by-hour activities. In a routine discussion about a business problem, they talk about how proposed solutions fit (or don’t fit) into the bigger picture. In a regular performance appraisal, they talk about how the employee’s behavior helps or undermines the vision. In a review of a division’s quarterly performance, they talk not only about the numbers but also about how the division’s executives are contributing to the transformation. In a routine Q&A with employees at a company facility, they tie their answers back to renewal goals. In more successful transformation efforts, executives use all existing communication channels to broadcast the vision. They turn boring and unread company newsletters into lively articles about the vision. They take ritualistic and tedious quarterly management meetings and turn them into exciting discussions of the transformation. They throw out much of the company’s generic management education and replace it with courses that focus on business problems and the new vision. The guiding principle is simple: use every possible channel, es- kept reminding him of the desired behavior, and all the feedback from his peers and subordinates, which helped him see when he was not engaging in that behavior. Communication comes in both words and deeds, and the latter are often the most powerful form. Nothing undermines change more than behavior by important individuals that is inconsistent with their words. Error #5: Not Removing Obstacles to the New Vision Successful transformations begin to involve large numbers of people as the process progresses. Employees are emboldened to try new approaches, to develop new ideas, and to provide leadership. The only constraint is that the actions fit within the broad parameters of the overall vision. The more people involved, the better the outcome. To some degree, a guiding coalition empowers others to take action simply by successfully communicating the new direction. But communication is never sufficient by itself. Renewal also requires the removal of obstacles. Too often, an employee understands the new vision and wants to help make it happen. But an elephant appears to be blocking the path. In some cases, the elephant is in the person’s head, and the challenge is to convince the individual that no external obstacle exists. But in most cases, the blockers are very real. Sometimes the obstacle is the organizational structure: narrow job categories can seriously undermine efforts to increase productivity or make it very difficult even to think about customers. Sometimes compensation or performance-appraisal systems make people choose between the new vision and their own self-interest. Perhaps worst of all are bosses who refuse to change and who make demands that are inconsistent with the overall effort. One company began its transformation process with much publicity and actually made good progress through the fourth phase. Then the change effort ground to a halt because the officer in charge of the company’s largest division was allowed to undermine most of the new initiatives. He paid lip service to the process but did not change his behavior or encourage his managers to change. He did not reward the unconventional ideas called for in the vision. He allowed human resource systems to remain intact even when they were clearly inconsis- Worst of all are bosses who refuse to change and who make demands that are inconsistent with the overall effort. pecially those that are being wasted on nonessential information. Perhaps even more important, most of the executives I have known in successful cases of major change learn to “walk the talk.” They consciously attempt to become a living symbol of the new corporate culture. This is often not easy. A 60-year-old plant manager who has spent precious little time over 40 years thinking about customers will not suddenly behave in a customer-oriented way. But I have witnessed just such a person change, and change a great deal. In that case, a high level of urgency helped. The fact that the man was a part of the guiding coalition and the vision-creation team also helped. So did all the communication, which 64 HARVARD BUSINESS REVIEW March-April 1995 Too often, an employee understands the new vision and wants to help make it happen. But something appears to be blocking the path. tent with the new ideals. I think the officer’s motives were complex. To some degree, he did not believe the company needed major change. To some degree, he felt personally threatened by all the change. To some degree, he was afraid that he could not produce both change and the expected operating profit. But despite the fact that they backed the renewal effort, the other officers did virtually nothing to stop the one blocker. Again, the reasons were complex. The company had no history of confronting problems like this. Some people were afraid of the officer. The CEO was concerned that he might lose a talented executive. The net result was disastrous. Lower level managers concluded that senior management had lied to them about their commitment to renewal, cynicism grew, and the whole effort collapsed. In the first half of a transformation, no organization has the momentum, power, or time to get rid of all obstacles. But the big ones must be confronted and removed. If the blocker is a person, it is important that he or she be treated fairly and in a way that is consistent with the new vision. But action is essential, both to empower others and to maintain the credibility of the change effort as a whole. Error #6: Not Systematically Planning For and Creating Short-Term Wins Real transformation takes time, and a renewal effort risks losing momentum if there are no shortterm goals to meet and celebrate. Most people won’t go on the long march unless they see compelling evidence within 12 to 24 months that the journey is producing expected results. Without short-term wins, too many people give up or activeHARVARD BUSINESS REVIEW March-April 1995 ly join the ranks of those people who have been resisting change. One to two years into a successful transformation effort, you find quality beginning to go up on certain indices or the decline in net income stopping. You find some successful new product introductions or an upward shift in market share. You find an impressive productivity improvement or a statistically higher customer-satisfaction rating. But whatever the case, the win is unambiguous. The result is not just a judgment call that can be discounted by those opposing change. Creating short-term wins is different from hoping for short-term wins. The latter is passive, the former active. In a successful transformation, managers actively look for ways to obtain clear performance improvements, establish goals in the yearly planning system, achieve the objectives, and reward the people involved with recognition, promotions, and even money. For example, the guiding coalition at a U.S. manufacturing company produced a highly visible and successful new product introduction about 20 months after the start of its renewal effort. The new product was selected about six months into the effort because it met multiple criteria: it could be designed and launched in a relatively short period; it could be handled by a small team of people who were devoted to the new vision; it had upside potential; and the new product-development team could operate outside the established departmental structure without practical problems. Little was left to chance, and the win boosted the credibility of the renewal process. Managers often complain about being forced to produce short-term wins, but I’ve found that pressure can be a useful element in a change effort. 65 When it becomes clear to people that major change will take a long time, urgency levels can drop. Commitments to produce short-term wins help keep the urgency level up and force detailed analytical thinking that can clarify or revise visions. Error #7: Declaring Victory Too Soon While celebrating a win is fine, declaring the war won can be catastrophic. 66 After a few years of hard work, managers may be tempted to declare victory with the first clear performance improvement. While celebrating a win is fine, declaring the war won can be catastrophic. Until changes sink deeply into a company’s culture, a process that can take five to ten years, new approaches are fragile and subject to regression. In the recent past, I have watched a dozen change efforts operate under the reengineering theme. In all but two cases, victory was declared and the expensive consultants were paid and thanked when the first major project was completed after two to three years. Within two more years, the useful changes that had been introduced slowly disappeared. In two of the ten cases, it’s hard to find any trace of the reengineering work today. Over the past 20 years, I’ve seen the same sort of thing happen to huge quality projects, organizational development efforts, and more. Typically, the problems start early in the process: the urgency level is not intense enough, the guiding coalition is not powerful enough, and the vision is not clear enough. But it is the premature victory celebration that kills momentum. And then the powerful forces associated with tradition take over. Ironically, it is often a combination of change initiators and change resistors that creates the premature victory celebration. In their enthusiasm over a clear sign of progress, the initiators go overboard. They are then joined by resistors, who are quick to spot any opportunity to stop change. After the celebration is over, the resistors point to the victory as a sign that the war has been won and the troops should be sent home. Weary troops allow themselves to be convinced that they won. Once home, the foot soldiers are reluctant to climb back on the ships. Soon thereafter, change comes to a halt, and tradition creeps back in. Instead of declaring victory, leaders of successful efforts use the credibility afforded by short-term wins to tackle even bigger problems. They go after systems and structures that are not consistent with the transformation vision and have not been confronted before. They pay great attention to who is promoted, who is hired, and how people are developed. They include new reengineering projects that are even bigger in scope than the initial ones. They HARVARD BUSINESS REVIEW March-April 1995 LEADING CHANGE understand that renewal efforts take not months but years. In fact, in one of the most successful transformations that I have ever seen, we quantified the amount of change that occurred each year over a seven-year period. On a scale of one (low) to ten (high), year one received a two, year two a four, year three a three, year four a seven, year five an eight, year six a four, and year seven a two. The peak came in year five, fully 36 months after the first set of visible wins. Error #8: Not Anchoring Changes in the Corporation’s Culture In the final analysis, change sticks when it becomes “the way we do things around here,” when it seeps into the bloodstream of the corporate body. Until new behaviors are rooted in social norms and shared values, they are subject to degradation as soon as the pressure for change is removed. Two factors are particularly important in institutionalizing change in corporate culture. The first is a conscious attempt to show people how the new approaches, behaviors, and attitudes have helped improve performance. When people are left on their own to make the connections, they sometimes create very inaccurate links. For example, because results improved while charismatic Harry was boss, the troops link his mostly idiosyncratic style with those results instead of seeing how their own improved customer service and productivity were instrumental. Helping people see the right connections requires communication. Indeed, one company was relentless, and it paid off enormously. Time was spent at every major management meeting to discuss why performance was increasing. The company newspaper ran article after article showing how changes had boosted earnings. The second factor is taking sufficient time to make sure that the next generation of top management really does personify the new approach. If the requirements for promotion don’t change, renewal rarely lasts. One bad succession decision at the top of an organization can undermine a decade of hard work. Poor succession decisions are possible when boards of directors are not an integral part of the renewal effort. In at least three instances I have seen, the champion for change was the retiring executive, and although his successor was not a resistor, he was not a change champion. Because the boards did not understand the transformations in any detail, they could not see that their choices were not good fits. The retiring executive in one case tried unsuccessfully to talk his board into a less seasoned candidate who better personified the transformation. In the other two cases, the CEOs did not resist the boards’ choices, because they felt the transformation could not be undone by their successors. They were wrong. Within two years, signs of renewal began to disappear at both companies. There are still more mistakes that people make, but these eight are the big ones. I realize that in a short article everything is made to sound a bit too simplistic. In reality, even successful change efforts are messy and full of surprises. But just as a relatively simple vision is needed to guide people through a major change, so a vision of the change process can reduce the error rate. And fewer errors can spell the difference between success and failure. Reprint 95204 HARVARD BUSINESS REVIEW March-April 1995 67 Harvard Business Review HBR Subscriptions Harvard Business Review Subscription Service P.O. Box 52623 Boulder, CO 80322-2623 Telephone: U.S. and Canada (800) 274-3214 Outside U.S. 44-85-846-8888 Fax: (617) 496-8145 American Express, MasterCard, VISA accepted. Billing available. HBR Article Reprints HBR Index Harvard Business Review Operations Department Soldiers Field Boston, MA 02163 Telephone: (800) 545-7685 Fax: (617) 496-8145 HBR Custom Reprints Inquire about HBR’s custom service for quantity orders. Imprint your company’s logo on reprint covers, select articles for custom collections or books. Color available. Telephone: (617) 495-6198 Fax: (617) 496-2470 Permissions For permission to quote or reprint on a one-time basis: Telephone: (800) 545-7685 Fax: (617) 495-6985 For permission to re-publish please write or call: Permissions Editor Harvard Business School Publishing Corporation Soldiers Field Boston, MA 02163 (617) 495-6849 Managing Organizational Change By Michael W. Durant, CCE, CPA The increased pace of change that many of us have encountered over the past ten years has been dramatic. During the late 1980s, many of us were grappling with issues that we had never encountered. The accelerated use of leverage as a means of increasing shareholder wealth left the balance sheet of some of America’s finest organizations in disarray. Many of our largest customers, that for years represented minimal risk and required a minimum amount of time to manage, consumed most of our energy. By the end of 1993, many of these organizations had either resolved their financial troubles in bankruptcy court or no longer existed. Just as we began to think the external environment would settle down and our professional lives would return to a normal pace, many of our organizations initiated efforts to improve operating efficiency to become more competitive in the world marketplace. Competition has heated up across the board. To succeed, the organization of the future must serve customers better, create new advantages and survive in bitterly contested markets. To stay competitive, companies must do away with work and processes that don’t add value. This hypercompetition has invalidated the basic assumptions of sustainable markets. There are few companies that have escaped this shift in competitiveness. Entry barriers, which once exerted a stabilizing force on competition, have fallen in the face of the rapid changes of the information age. These forces have challenged our capacity to cope with organizational life. Permanent White Water Things are not going to settle down. Many things we used to take for granted are probably gone forever. We cannot predict with any certainty what tomorrow will be like, except to say that it will be different than today. Peter Vaill has captured the essence of the problem of a continuously changing context in a compelling image - “permanent white water.” In the past, many of us believed that by using the means that were under our control we could pretty much accomplish anything we set out to do. Sure, from time to time there would be temporary disruptions. But the disruptions were only temporary, and things always settled back down. The mental image generated by these thoughts is that of a canoe trip on a calm, still lake. However, Vaill explains, in today’s environment, we never get out of the rapids. As soon as we digest one change, another one comes along. Usually there are many changes occurring simultaneously. We have limited control over the environment, but to navigate the rapids we must exercise skill. The “permanent white water” image has a strong visual appeal, conveying as it does a sense of energy and providing a visual sense of navigating on an unpredictable wild river. Creating the Vision Vision and leadership drive successful change. As the change agent, first you must create a vision of the future that is capable of focusing the group’s energy. The vision should contrast what is with what can be and it must be comprehensive enough to direct attention at how to bridge the gap to the future. Change must become a core organizational value using customer feedback, internally developed organizational improvements and other external feedback. Change initiatives should also be linked to efforts to improve overall performance and profitability. Commitment from senior management at the earliest stages of the change process is required. Managing change effectively requires an understanding of the variables at play, and adequate time must be allowed for implementation. Three Stages of Change To thrive in the chaotic world we live in, we must embrace strategies that have been developed to successfully manage change. The theory and practice of organizational change contains elements of both behaviorist and cognitive learning theories. An investigation into change within an organizational setting reveals a three-stage process of unfreezing, change and refreezing. Unfreezing is the first stage of the change process and consist of unlearning past behavior. The change process begins when the organization experiences disconfirmation. Disconfirmation is experienced in the form of cognitive dissonance. Cognitive dissonance is a concept taken from the field of psychology that refers to incompatibility between two or more attitudes or between behavior and attitudes. Inconsistencies from the desired state are uncomfortable and we try to reduce the dissonance and thus the discomfort. Disconfirmation may be caused by external pressures or convincing data from within the organization. An external example might occur due to pressure applied to senior management by shareholders to increase the return on their investment. Dissonance may be generated by internal benchmarking research that reveals areas in the organization that require attention. If the factors creating the dissonance are relatively important the pressure to correct the imbalance will be high. Once a potential problem surfaces an information search begins to determine what action is required to resolve the issue. If a problem exists, creative solutions are developed. Support for unlearning develops when existing systems are challenged. Unfreezing involves dismantling past learning. The second stage of the change process consist of incorporating new behaviors into organizational processes. Behavior and ideas that are embedded in the corporate culture must be replaced. Redirecting people’s attention is an essential part of change. The development of skills to enable people to do things differently is required. Training must be provided to insure that employees understand their roles in making change happen. Processes and people must be aligned to support change. Skills and competencies to enable people to do things differently must be developed. Employees must understand the dynamics of the change process and also the functional requirements of the job. New rules and policies that reinforce the desired ways of operating must be created and documented. Old customs and norms that reinforce the old ways of doing things must be replaced with norms that reinforce the new ways. For example, if the organization is developing teams and moving away from functional departments, then team work across departmental boundaries should be emphasized. Rewards should be specific to the change goals that have been set. Refreezing is the final stage of the change process. It is comprised of reinforcing and measuring behavior change. After the training requirements are defined, the reward system, reporting relationships and other systems can be designed to reinforce the new behavior. If the change process requires certain behaviors from employees, then performance appraisals, promotions and bonuses should be based on the desired performance outcomes. Creating objective measures for performance will demonstrate your commitment to the change initiative. Emotional Phases of Change Organizational change has an element of loss inherent in the process, and it is a loss that is often deeply felt by employees. The Kubler - Ross Grief Model addresses the emotional issues associated with change. The four emotional states experienced throughout the change process may be expressed by employees in behaviors that are obstacles to the process of change. By understanding the emotions employees often encounter during change, you will be better prepared to facilitate the change process. Kubler - Ross Grief Model Stage 1 Stage 2 Stage 3 Stage 4 Denial Resistance Exploration Commitment The first emotional state experienced during change is denial. For example, employees encountering a change initiative might be saying to themselves, “I can’t believe this is happening to us.” Unresolved fears about the change initiative need to be addressed during this phase. Fear and mistrust need to be replaced by acceptance. To be an effective change agent, you should encourage acceptance to change by initiating trust-building activities. The second emotional state is resistance to the change process. It is common for employees to begin to resist the change initiative. During this phase, employees attempt to slow down or derail the change initiative. You must be able to spot resistance when it occurs and formulate sound strategies for overcoming it. Resistance is a natural reaction to change, and it can take many forms. The easiest form of resistance to recognize is those who loudly indicate their dissatisfaction with the changes taking place in the organization. Soliciting feedback from these individuals lets you know where they stand, so that you can overcome their objectives. Employees often resist change through denial. These individuals refuse to acknowledge that a problem exists. For example, competition might force a business to organize work around processes to improve operating efficiencies. Functional departments involved in these processes would be combined. Employees might not see a need for this change. The reasons for change must be fully explained so that employees understand why it is necessary to embrace the change. Another common resistance is exhibited by individuals who willingly embrace the change, but when they realize that it takes additional time and effort, they begin to undermine the change process. It is best to slow down and allow people to absorb change gradually before forging ahead. Sometimes employees use confusion to postpone change. After explaining the changes repeatedly, employees ask the same questions over and over again. They may truly be confused or they may be using confusion as a form of resistance to avoid accepting change. The most dangerous form of resistance is referred to as malicious compliance. Employees enthusiastically support change, but covertly undermine the effort. For example, during presentations, the questions are polite and employees seem accepting. As you move forward they act as though they are implementing the new program. Months later you find out nothing has changed. How we respond to resistance is very important. Forcing compliance may increase resistance. Th...
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